Correlation Between MAG Silver and Aya Gold

Can any of the company-specific risk be diversified away by investing in both MAG Silver and Aya Gold at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining MAG Silver and Aya Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MAG Silver Corp and Aya Gold Silver, you can compare the effects of market volatilities on MAG Silver and Aya Gold and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in MAG Silver with a short position of Aya Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAG Silver and Aya Gold.

Diversification Opportunities for MAG Silver and Aya Gold

0.47

Correlation Coefficient

MAG Silver  Aya Gold

Very weak diversification

The 3 months correlation between MAG and Aya is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Aya Gold Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aya Gold Silver and MAG Silver is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on MAG Silver Corp are associated (or correlated) with Aya Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aya Gold Silver has no effect on the direction of MAG Silver i.e., MAG Silver and Aya Gold go up and down completely randomly.

Pair Corralation between MAG Silver and Aya Gold

Assuming the 90 days trading horizon MAG Silver Corp is expected to generate 0.62 times more return on investment than Aya Gold. However, MAG Silver Corp is 1.62 times less risky than Aya Gold. It trades about 0.17 of its potential returns per unit of risk. Aya Gold Silver is currently generating about 0.01 per unit of risk. If you would invest  1,653  in MAG Silver Corp on September 3, 2024 and sell it today you would earn a total of  527.00  from holding MAG Silver Corp or generate 31.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

MAG Silver Corp  vs.  Aya Gold Silver

MAG Silver Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MAG Silver Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, MAG Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Aya Gold Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aya Gold Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Aya Gold is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with MAG Silver and Aya Gold

The main advantage of trading using opposite MAG Silver and Aya Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAG Silver position performs unexpectedly, Aya Gold can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Aya Gold will offset losses from the drop in Aya Gold's long position.

The idea behind MAG Silver Corp and Aya Gold Silver pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.